Private equity exits in India jumped over 60% to $15.7b in 2017: Bain

Gateway of India, Mumbai, Maharashtra, India. Photo: Pixabay

Private equity (PE) exits in India grew by more than 60% in value terms to $15.7 billion in 2017, making it the best year for PE exits, according to Bain and Co.’s India Private Equity Report 2018.

In 2016, the Indian private equity industry reported total exits worth $9.6 billion. The number of exits rose 7% to 211 in 2017.

For a long time, Indian private equity was saddled with the constraint of low exits. That trend appears to have changed now as 2017 marked the third year of strong exit momentum.

In 2015, the industry witnessed exits worth $9.4 billion, according to the Bain report.

However, even as Bain expects many more exits in the next few months, a mismatch in valuation expectations between investors and firm owners could hinder deal-making.

“Bain expects many more exits in the next few months and funds that Bain spoke to feel the number of secondary and strategic sales will increase. According to India-focused fund managers, a mismatch in valuation expectations between investors and firm owners hinders deal making and maintaining high level of returns could hinder exits,” said the report.

Public markets emerged as the preferred route for exits in 2017, with over 50% coming from there, (including initial public offerings).

Big-ticket deals such as Qatar Foundation Endowment’s exit from Bharti Airtel Ltd in an open market transaction for $1.48 billion; Tiger Global’s secondary sale of Flipkart for $800 million; and Apax Partners exiting GlobalLogic for $780 million powered the exit momentum in 2017.

The top 10 exits together accounted for 40% of total PE exit value in 2017.

Consumer technology, banking, financial services and insurance (BFSI) and telecom sectors led exit activity and accounted for 50% of the total exit value.

PE investments too touched a record high in 2017 with $26.4 billion invested by PE funds, an increase of 60% over 2016.

Top deals in 2017 included an investment of $2.5 billion in Flipkart by Japan’s SoftBank Group, followed by a $1.4 billion investment by SoftBank in One97 Communications Ltd, which runs Paytm; and a $1.1 billion investment in India’s largest cab-hailing service Ola (ANI Technologies Pvt. Ltd) by Tencent and SoftBank.

Consumer technology and BFSI segments were high-growth sectors and contributed to more than half of the total deal value for the year.

Investments from sovereign wealth funds and pension funds accounted for 20% of deal value. Sovereign wealth funds and pension funds such as Canada Pension Plan Investment Board, Singapore’s GIC, Abu Dhabi Investment Authority and Ontario Teachers’ Pension Plan, increased activity in India in 2017.

At $9 billion, Indian dry powder remained at levels similar to 2016, reaffirming the potential for investments in the Indian market.

According to the report, new asset classes and fund types such as alternative investment funds (AIFs) continue to emerge in India. AIFs raised about $5.1 billion in 2017 compared to $2.4 billion in 2016.

Also Read:

PE firms face heated competition from Asian tech investors like SoftBank, Tencent

Asia could be top destination for cash-heavy private equity firms

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.